Adding Satellite Facilities

In our company’s never-ending quest to grow business, we typically develop our annual sales budgets with the idea that we’ll increase our sales through traditional means. This usually means taking steps such as adding additional sales reps, or growing sales via expanding a product line or simply adding customers. At times, however, we find ourselves thinking “bigger.”

One of these more expansive ideas: Add another location.

When it comes to growth, every print provider should at least consider expanding their business by supplementing it with additional locations as a part of their strategy. But there are pros and cons to doing so.

Two options
When considering adding a satellite office, your first determination is whether that office will be a sales office only, or, alternately, an office that houses production capabilities as well as sales. Owning and operating a sales-only office vs. a production office presents two very different challenges and the decision should be based on the results you’re trying to achieve with the satellite location.

For example, if your primary goal is to expand your sales into new geographical areas, then a sales office might suffice. On the other hand, if your objective is to increase your overall business footprint, your better choice might be to expand with both production and sales capabilities.

In the case of a sales-only office, the benefits are pretty straightforward. A sales office located in a new location can be a great way to establish additional sales in that area. There’s a definite advantage to having your people actually live and work in the same area where your customers reside. Yes, managing customers from a distance by the occasional visit – whether once a month, once a quarter, or even once a year – can certainly be done, but it also creates some significant challenges. Being nearby, on the other hand, enables you to establish a more personal connection to your customers and it provides improved responsiveness to their needs.

Another advantage of an additional sales office is that it will bolster the perception that you are a bigger company, to existing as well as potential customers. You now have more capabilities to service them. For example: Your customers often want you to provide them with some personalized consulting on bigger projects. This can be much more effective if you are able to meet with them in-person rather than by phone. And while this in-person huddle might be something as simple as reviewing color matches, being there can make much more of a connection to your client.

But, yes, there are a few disadvantages to establishing a remote sales office. For one, you’ll have to deal with the management of that office, which can be a difficult chore. We need to constantly give our sales reps the attention and support that they need to succeed – a task becomes much more difficult when they’re in a remote location. It can be very frustrating to your sales reps to be located in a site where they don’t have the ability to see, touch, or inspect jobs being produced at a distance. Remote sales reps must trust the home office to manage and produce their jobs, which is a difficult challenge for many.

Too, providing your sales team with the constant feedback and motivation that they typically need becomes logistically challenging when they’re in a satellite office. The only way it can really work is if your sales manager regularly visits the satellite office to ensure that each salesperson feels like they’re truly part of the team.

This strategy becomes even more difficult, by the way, if you’re setting up satellite offices in multiple places across a large geographical area. Management of offices in multiple time zones that might then require extensive travel for managers is something that should be carefully considered. While some companies have successfully managed multiple locations spread across the country, most have elected to keep their offices in one particular region of the country in an effort to avoid some of the issues that are inherent to long-distance managing.

A production component
Adding a satellite office that includes both sales and production is obviously a more complicated move. One of the biggest challenges is the expense of duplicating equipment in another facility. While it’s unlikely that your satellite office will completely replicate your current equipment roster, once you begin adding pieces of equipment, there are numerous issues that accompany that decision.

First and foremost, you’ll need to hire personnel to run the shop – finding qualified people is always difficult. And there’s the expense and effort needed to now maintain inventory in two locations in order to support sales and production. Plus, any printing equipment will need to be supported by finishing capabilities. Another factor: managing the production processes to ensure quality.

So, yes, there are challenges. But establishing a satellite production facility can create great benefits to your business. You will have redundancy with equipment and production, which can be a huge advantage in the event of equipment failures or other issues. More importantly, an additional production site can offer services to your new local customer base in a much more timely fashion. You will likely save these new clients money when it comes to shipping costs, packaging costs, and other such expenses.

In addition, having a facility in a location near your customers sends the message that you care about their business – so much so that you want to be close enough to service their needs. Establishing production at a satellite facility will also provide critical support for your sales staff in the same location. My take is that your chances of success in a new location are likely to be enhanced if you opt to add production to the operation.

Homework time
The decision to expand your business to a satellite facility is not an easy one. Our own company opened up a sales office in the San Francisco Bay Area 10 years ago and we have never regretted that decision. On the other hand, I know several businesses that have had the opposite experience with satellite offices, eventually shutting them down.

While there isn’t really a right or wrong answer – nor any methodology that will prevent risk on your part – make sure you carefully weigh the pros and cons identified here to ensure that you’re making the correct decision. Without question, opening up a satellite office is a major challenge to any business. But if you do your homework and execute a well-planned strategy, you can create some great success for your business as you move forward.
 

Marty McGhie is VP finance/operations of Ferrari Color, a digital-imaging center with Salt Lake City, San Francisco, and Sacramento locations. The company offers high-quality large- and grand-format photo, inkjet, fabric, and UV printing. [email protected]